Search in:

Treasurers meet to discuss tax reform

Adam Gartrell

Tax reform will top the agenda when Treasurer Wayne Swan meets his state and territory counterparts on Monday but his government is holding firm against any major changes to the GST.

The Standing Council on Federal Financial Relations is expected to discuss stamp duty on home sales and the recent GST review led by former premiers Nick Greiner and John Brumby when it meets in Canberra.

Mr Swan said on Sunday that tax reform isn't the exclusive job of the federal government.

"All levels of government must do their share of the heavy lifting - a point I'll be making to my state and territory counterparts tomorrow," the treasurer said in his weekly economic note.

Advertisement

Mr Swan singled out state stamp duties on home sales for particular scorn, saying they discourage people from relocating for work and make it harder for people to upsize or downsize as their families change.

But Mr Swan has made it clear the government remains opposed to raising the rate or broadening the base of the goods and services tax.

"It's wrong to pretend that jacking up the GST is the holy grail of tax reform," he said.

"While it has become an accepted part of the tax mix and its integrity should be protected, the fact is it is a regressive tax - those on lower incomes pay a larger proportion of their incomes on it than those on higher incomes."

Extending the tax on food, health and education would hit those on the bottom 20 per cent of incomes much harder, he said.

The GST rate has been 10 per cent since it was introduced in mid-2000, and fresh food, education and health products are exempt.

The GST review proposed a number of refinements to the tax's distribution arrangements.

Queensland, NSW, Victoria and WA put in a joint proposal to the review arguing for a population-based distribution of GST funds, which would slash money going to smaller states.

The federal government's Minerals Resource Rent Tax (MRRT) will also be on the treasurers' agenda.

Mr Swan has also called on Australians to submit their ideas and priorities for next year's budget.

But people should keep in mind the pressures on government revenue, he said.

"That means proposals for budget spending should ideally be accompanied by proposals for equivalent savings," he said.

Submissions should be sent to Treasury's Budget Policy Division or emailed to prebudgetsubs@treasury.gov.au no later than January 31.